SuperDry (lon:sdry)
SuperDry – Looking Again As It Can’t Go Much Lower

SuperDry Financials

ItemCurrent PeriodPrevious Period
Year20192018
Period6 Months6 Months
Revenue£369m£414m
Earnings
Adjusted Earnings
EBITDA
Adjusted EBITDA
Statutory Profit(£4m)£26m
Adjusted Profit
Total Debt
Net Debt£9m(£19m)
SuperDry Share Price
Grade:The Green Grade - Shares That I Think Are Oversold..
Title: SuperDry – Looking Again As It Can’t Go Much Lower
Company: SDRY - SuperDry
Share Price Then: 112p
Author: Ian Smith
Date: Tue 14 Jul 2020
Comments: When I last looked at Superdry it was when Julian Dunkerton was having his spat with the board as he was the one who could see the future and they didn’t.

Towards the end of 2018 around October Julian Dunkerton one of the founders of Superdry decided that he wanted to rejoin the board after a disappointing trading update.

The board didn’t want him back and this result in a spat best described as Julian claiming the board was out of touch with what the customer wanted, the board saying well Julian was involved with the decisions he is now criticising and Julian saying no I wasn’t.

This came to head as Julian owns enough shares to request a general meeting proposing that he and Peter Williams be elected to the board, which he did on the 1st March 2019

The general meeting was held on 2nd April 2019 and Julian and Peter were elected to the board by 51.15% to 48.48%.

After this result the then current board resigned as they had promise they would do but the closeness of the votes shows that there was no great enthusiasm to bring him back. This could be because the institutional shares holders weren’t supporting him as he was basically proposing something radical.

On the 14th of Oct 2019 Julian Dunkerton's contract as CEO has been extended to April 2021, so it does seem that he is in charge. Whether his vision is the right one is not yet clear but he does seem to be free to pursue it.

In Aug 2019 Nick Gresham has been appointed Chief Financial Officer on a permanent basis, he joined as a temp in June 2019.

Whatever the reasons at the start of 2018 the share price was around 2,000p but this was a peak as the price over the previous couple of years was in the 1,500p – 2,000p range. By October 2018 it was down to around 750p as trading updates were not positive and for most of 2019 the shares traded in the 400p-500p range.

COVID seems to have been the cause of the drop from that range to the current value of around 115p.

Drops of this size are usually related to companies being almost broke or having done a massive share issue, neither or which apply here.

There was a trading statement in May which said that pretty much all stores had been closed, but web sales had doubled to around £3.7m per week, this extra £1.8m is about 33% of the lost £5m-£6m of sales in stores.

Like many the numbers are full of ifs and maybes but the underlying picture seems to lower sales revenue but also less stock sold at discount, with a very unclear picture on the trend for web sales.

So we appear to be stuck in limbo, has Superdry got it right and the process has been snuffled out by COVID or is the company in a terminal decline?

Recent share price trends seem to be similar to Ted Baker, but they have done a share issue and some property sale and leaseback.
Read Count: 114

Buy/No Buy In A Nutshell
NegativesThe company is nearly all about the brand, young and trendy and older people started buying it a while back. Big disagreement between the founder, the board and institutional investors in 2019.
PositivesRelatively little debt and the founder retook control about a year ago plus selling overseas as a luxury foreign brand, think Brompton bikes.
Initial Review Price114p
Last Review Price114p
Last Review Date19-Jul-2020
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